Renault to Update Romanian Car Maker

London - Renault's investment in Romanian automaker Dacia goes back to the 1960s. Renault never had much say over the company however, which was operated under strict communist rule until the early 90s. Today, the car maker is one of the best examples in the world of how not to build a car. Machinery and manufacturing equipment are old and worn out, facilities are crumbling and dirty, badly in need of paint. And, sales of Dacia are relegated to markets where many other automakers refuse even to compete. Dacia sales have been stagnant over the last few years.

The company has often been contrasted with its Czech rival Skoda, which is heavily owned by Volkswagen and which has provided the western technology required to turn a former communist regime antique into a modern car company. Skoda offers proof that there is return-on-investment on former communist-run automakers, you just have to dig down deep to find it.

That has prompted Renault to commit to invest over $300 million in Dacia over the next few years. Most of that money will go to rebuilding and modernizing a plant with the idea of introducing a new model in 2004. The transition will be interesting and important in establishing former iron curtain countries in the European and perhaps, one day, international auto industry. Renault says it hopes to have Dacia cranking out one-half million vehicles a year by the end of the decade.